BEND, Ore. (CNN/Money) – The results are in, confirming what a lot of American workers may have already figured out for themselves. Health insurance costs continue to climb.
Premiums for employer-sponsored health insurance increased almost 14 percent between spring 2002 and spring 2003 -- the highest increase since 1990 -- according to a survey released Tuesday by the Kaiser Family Foundation and Heath Research Educational Trust.
Although employers continue to foot most of the insurance bill, they are steadily passing on higher costs to their employees by:
What to expect in the coming year
- Increasing workers' premiums. Since 2000, that annual premium paid by employees to insure themselves and their families has increased nearly 49 percent. In 2003, the employee's cost for family coverage increased 13 percent to $2,412 a year, which accounts for 27 percent of the total premium. Premiums for single coverage increased by less than 8 percent to $508 a year.
- Raising deductibles. Nearly four in five workers must pay a deductible before their health plans will pick up any expenses. Under a conventional health plan, workers paid an average deductible of $384 (up 30 percent since last year) for single coverage and $785 (up 12 percent) for family coverage. Increasingly, workers are required to pay a separate deductible, averaging $202, when they are admitted to a hospital.
- Increasing drug co-payments. Workers pay an average of $9 out of pocket for generic drugs, $19 for brand-name drugs with no generic substitute and $29 for brand-name drugs with a generic alternative.
- Changing out-of-pocket limits. A saving grace for employees with large medical bills is an annual cap on the total out-of-pocket expenses they are expected to pay. Yet, 15 percent of all plans report that they are reducing the services or items included under that limit.
The big question on many workers' minds is, no doubt, whether they'll lose health care benefits altogether. Employers, after all, are the primary source of health coverage in the United States, covering 62 percent of all full- and part-time employees.
One nugget of good news from the survey is that firms seem reluctant to drop health coverage for their current employees.
Rather, they'll continue passing on higher medical costs to their employees while looking for alternative plans. One such alternative is the high-deductible plan, which charges a lower premium but carries an annual deductible of $1,000 or more for a single employee.
The fate of retired employees' insurance, however, is quite another story.
In 1988, 66 percent of all large employers offered their retired employees health coverage, whereby they could supplement Medicare coverage. Today just 38 percent of large firms are offering such a benefit to retired employees.